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The White House on Monday hailed the news that a scaled-down portion of the Keystone XL pipeline that would stretch from Oklahoma to Texas will move ahead, but the president’s critics said the move only underscored the need to approve the entire Canada-to-Texas project.

Calgary-based TransCanada, which is building the pipeline, said it could move ahead with the southern leg of the proposed 1,700-mile oil pipeline because it did not cross the U.S. border, thus did not need Mr. Obama’s approval. The shorter pipeline is expected to cost roughly $2.3 billion and create some 4,000 jobs and will be completed next year.

The Obama administration will reject the Keystone XL pipeline Wednesday afternoon, according to a source closely following the issue.

The State Department is expected to make an announcement at 3 p.m. Wednesday afternoon. While the administration is expected to reject TransCanada Corp.’s permit application, it will allow the company to reapply, according to the source.

The White House has long signaled that the administration is unlikely to approve the Alberta-to-Texas pipeline under the timeline required in December’s payroll tax cut extension law, which mandates a decision by Feb. 21.

Environmentalists, who have made stopping Keystone a top priority, and many Democrats oppose it due to greenhouse gas emissions from Alberta’s massive oil sands projects and other ecological concerns.

The Keystone pipeline would have connected the oil sands in Canada — which contain proven oil reserves of 170 billion barrels, third in the world behind Saudi Arabia and Venezuela — with Port Arthur, Texas, on the Gulf Coast. (The reason that the pipeline was to terminate in Texas was to circumvent the refining bottlenecks now prevalent in the Midwest). The pipeline would have brought 700,000 to a million barrels of oil a day to U.S. refiners on the Gulf of Mexico. It would have created 20,000 new construction jobs in a country suffering from chronic 9% unemployment — not to mention all the ancillary jobs in creating the steel pipe and transporting it to the middle of the country, along with housing and feeding all those pipeline workers. Unlike the bogus “shovel ready” jobs Obama promised and later laughed about with his stimulus bill, these jobs really were shovel-ready.